Right Resources Bulletin – Foreclosure Acquisition Project

This Week’s News from the ICHH Regional Networks and the Right Resources Bulletin Board
December 8, 2009
Innovation in the Spotlight:
The Brockton Housing Authority’s
Foreclosure Acquisition Project

The Wall Street Journal reported in March 2007 that the City of Brockton was a national hot spot of subprime mortgage lending and subsequent defaults.[1]   Despite the dire environment, the crisis also offered opportunity to the Brockton Housing Authority.   The decrease in housing prices meant that they could potentially purchase foreclosed properties in Brockton at low cost and turn them into permanently affordable housing for families.  Not only would this create a positive outcome for many families waiting for affordable housing, but it would help slow the neighborhood decay, stabilizing neighborhoods and revitalizing hard-hit communities.    In particular, the Brockton Housing Authority was determined to avoid the cycle of blight that accompanies foreclosures and abandoned properties, drawing on the city’s experience of an earlier wave of foreclosures in the 1990’s. 
The way that Brockton Housing Authority has approached the foreclosure crisis provides a primer for other housing developers who want to capitalize on a down market to create more permanently affordable housing. 

The Foreclosure Acquisition Program

In early 2007 the Brockton Housing Authority approached the Paul and Phyllis Fireman Charitable Foundation with an idea to purchase one bank-owned triple decker house in Brockton, rehabilitate the units, attach a project based Section 8 voucher to the units, and make it available for a Brockton family in need of stable housing.    The Fireman Foundation, then under the leadership of Melinda Marble, was very excited in participating in this project to aid in the redevelopment of Paul and Phyllis Fireman’s home town.   At the encouragement of the Fireman Foundation, the Brockton Housing Authority expanded its proposal to six triple deckers with 18 units (2, 3, and 4 bedroom units).  The support of the Fireman Foundation leveraged $600,000 in funding from DHCD, $100,000 of HOME funds from the Mayor of Brockton, Jim Harrington and a $1.2 million loan from Rockland Trust.  With funding secured, the Brockton Housing Authority moved forward with the implementation of this project.  While the process of purchasing bank-owned properties can be challenging because of competition from housing speculators the Brockton Housing Authority learned to remove these barriers to the purchase process by creatively partnering with a few good mortgage brokers.
 To date 5 triple-deckers, with 15 units have been purchased and rehabilitated.  15 Brockton families, some of whom had experienced homelessness and all who had experienced housing instability, have been moved into these units.  The next triple-decker will be likely added to the portfolio in February 2010.

Key to Making this a Model Program

The Brockton Housing Authority program is unique from other foreclosure acquisition programs in several key ways.  First, the program is supported by a combination of public and private resources.  Second, the Brockton Housing Authority has committed a project based Section 8 voucher to each unit which ensures the units’ long term affordability – tenants pay 30% of their gross income toward rent.  And third, along with the Section 8 voucher, tenants are given the option and are strongly encouraged to enroll in Section 8’s Family Self Sufficiency program. 

The Family Self-Sufficiency (FSS) program provides participating families both with financial incentives to work their way off welfare and housing subsidies, and with the support services to do so. The primary financial incentive is the FSS escrow account.  The Public Housing Authority will put money into the family’s escrow account each month. The amount contributed to the escrow account is equal to any rent increase that is caused by an increase in earnings once you start participating in the program.  Therefore if a family’s income increases after enrollment in the program their rent will not increase proportionately but rather that increase will be deposited into the escrow account.   In addition to the financial incentive FSS includes access (either directly from the Public Housing Authority or through referral) to supportive services including:
1.      Child care
2.      Transportation as needed for employment
3.      Education
4.      Employment services
5.      Personal welfare–substance/alcohol abuse treatment and counseling;
6.      Household skills and management
7.      Counseling–counseling in the areas of:
            i) The responsibilities of homeownership;
            ii) Opportunities available for affordable rental and homeownership in the private housing market, including information on an individual’s rights under the Fair Housing Act; and
            iii) Money management
The Brockton Housing Authority sees this program as a model to be replicated in other communities impacted by the foreclosure crisis in Massachusetts and across the country.  If you have further questions about the program please contact Kevin Harriman at the Brockton Housing Authority at kevinh@brocktonhousingauthority.com


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